Studies show that some hospitality properties can turn a nice profit using daily deals, while others can’t. How does yours rate?

Welcome to another addition of hospitality property school.

In June of 2012, Rice University conducted a 1-year study tracking activity with daily deal websites. They found that travel and tourism did well, with 68% of participating businesses turning a profit using daily deals.

What is the Goal of Daily Deals?

Daily deals have been criticized for bringing properties a flood of low-quality business that cashes in on the daily deal, and then never returns. This is does not have to be the case for hospitality properties.

Many hospitality property owners have been concerned that only their repeat customers would use the daily deals, thus eating away at revenue they would have made anyway.

The data shows that this is not the case.

About 80% of business generated by daily deals is from new customers.

Additionally, 80% of customers who used a daily deal ended up spending more money at the business.

This can include hospitality upgrades, additional night stays, restaurant purchases, and more.

Of the new customers that purchased a daily deal, 1/3rd of them became repeat customers making daily deals a genuine strategy for growing a business.

Another measurement to consider is that many customers who buy the deal, use it.

For hospitality properties, this is wonderful news.

It means that using daily deals, you can generate an extra stream of revenue on vacant inventory.

You’re making free money on inventory that would have gone vacant anyway (which is why you set it aside for daily deal websites).

Daily Deals are Not Right for Every Property

The study showed that some businesses can turn a nice profit using daily deals, while others can’t. The big winners are smaller independent properties and huge properties, with

68% of them making a profit.

Properties that don’t tend to do well are ones who make between $500,000 and $5 million annually. That said, even some of them made a profit, meaning that the strategy used is important to a property’s success.

Some Benefits of Using Daily Deals

As previously stated, daily deals are a great way to bring in new customers

They are a great way to get real user reviews about your property.

It is a way to fill rooms during the off or low seasons.

Daily deals are a great way for new properties to gain positive market exposure

Make the value in the experience, instead of the discount

Write deals that increase perceived value without eating into your costs. The most profitable deals offer guests things that cost you little, encouraging them to pay for the services that cost you more.

Give away two tickets to a local sporting event,

Free tickets to a local tour

Offer free meals

Free upgrades

Free entertainment

Get guests onto your email list

Find ways to get them to follow you on social media, and to visit your website. Capture them when they stay, so that you can market directly to them again in the future.

Things You Have to Keep in Mind

You have to know your costs. Make sure you are aware of what it cast to get a new guest and the pricing of your competitors. This is important if you want to make your deal appealing.

Make sure that your deal is designed to soften disruption. Have the offer valid for specific weekends and make sure each deal has an expiration date.

Place occupancy restrictions on your deals and be realistic with the number of deals you can handle, so you can give the daily deal website a hard cut-off number.

Be sure your staff is ready. Have extra front-desk representatives on hand to handle a busy weekend when you expect many deals to be redeemed.

Make sure your housekeeping is prepared to turn around rooms as quickly as possible, to get them ready for the next daily deal visitor.

Daily Deals might not be for everyone but if you plan, it can turn into a nice extra stream of revenue.

If you are looking for more information, you can start with the following sites:

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